The plan (32 page / 3.45MB PDF), launched by business and energy secretary Greg Clark and Ofgem, forms part of the government's industrial strategy. It will modernise the regulatory environment for electricity storage, providing clarity on licensing, planning, connections and charging for storage, and by enabling storage to be located on the same site as renewable energy generators.
The government said it also wanted to increase the use of smart meters, enable suppliers to offer lower tariffs and make it easier for companies to develop smart appliances and gadgets.
Clark announced the first phase of the £246m, four-year investment at an event in Birmingham. The investment will be delivered through a coordinated programme of competitions that will aim to boost both the research and development of expertise in battery technology, known as the Faraday Challenge.
Currently electricity storage is not defined in primary legislation, making its regulatory status within the electricity system and planning regimes unclear. When parliamentary time allows, the government is to amend the Electricity Act 1989 and other legislation to explicitly define electricity storage as a distinct subset of generation. Health and safety standards will also be updated.
In the meantime Ofgem said it would consult on a modified generation licence for storage with the aim of it being introduced by summer 2018. It added it would clarify the regulatory position on ownership and operation of storage by network operators, and would outline steps to ensure there are no regulatory gaps, and so ensure the operation of storage is sufficiently unbundled from network businesses.
Energy expert Becca Aspinwall of Pinsent Masons, the law firm behind Out-Law.com, said: “Legislating to support the advance of energy storage may prompt a sigh of relief for developers of projects that have been stifled by outdated energy regulation. For projects that have been rendered economically unviable due to exposure to inflated grid costs there is now some hope that this costly barrier to entry will be removed when storage is recognised as a distinct form of generation by law.”
Ofgem is also currently working on a review of network charging to provide more transparency and reduce the risk of over-charging for storage facilties. Aspinwall said this was a critical move.
“Transparency of pricing and network charging is crucial for the UK in having a level playing field for storage projects,” Aspinwall said.
“Working alongside National Grid’s ambitions for balancing services and plans for demand-side response there is hope that the removal of hurdles could prompt investment and a flurry of storage projects coming on line. Given the need to boost domestic supply and reduce strain on our ageing grid infrastructure, this couldn’t be more critical,” Aspinwall said.
The plans announced this week are the latest in a string of measures designed to tackle growing energy demands. In June National Grid launched a consultation into the way it responds to UK's future energy needs, with an emphasis on a strategy which could encourage further development in the battery storage sector in the future.
Meanwhile in January the previous government set a target for the roll-out of smart meters across the UK by the end of 2020 as a means of helping reduce unnecessary energy use and emissions and to cut consumers' energy bills.
Aspinwall said the plans were encouraging but more work needed to be done.
“The majority of this paper reads like a to do list for government rather than transformative measures for the industry. Although it’s positive that the government is taking a holistic view of the requirements for a future energy market and encouraging others to do the same, the real nitty gritty of the future system is still to be developed through consultation and legislation,” Aspinwall said.